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The Association between Corporate Boards, Audit Committees, and Management Earnings Forecasts: An Empirical Analysis

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  • IRENE KARAMANOU
  • NIKOS VAFEAS

Abstract

We study how corporate boards and audit committees are associated with voluntary financial disclosure practices, proxied here by management earnings forecasts. We find that in firms with more effective board and audit committee structures, managers are more likely to make or update an earnings forecast, and their forecast is less likely to be precise, it is more accurate, and it elicits a more favorable market response. Together, our empirical evidence is broadly consistent with the notion that effective corporate governance is associated with higher financial disclosure quality.

Suggested Citation

  • Irene Karamanou & Nikos Vafeas, 2005. "The Association between Corporate Boards, Audit Committees, and Management Earnings Forecasts: An Empirical Analysis," Journal of Accounting Research, Wiley Blackwell, vol. 43(3), pages 453-486, June.
    • Handle: RePEc:bla:joares:v:43:y:2005:i:3:p:453-486
    DOI: 10.1111/j.1475-679X.2005.00177.x
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